Professional services firm Deloitte has revealed its next generation of cost savings strategies in the age of digital disruption.
In its Global Cost Survey Report (GCSR), Deloitte states that nearly two-thirds of companies surveyed have failed to reach even modest targets when using traditional and tactical strategies.
“Companies that fail to keep stride with the pace of innovation and remain complacent with traditional cost management practices will undoubtedly lag behind and fall to more forward-looking competitors,” Deloitte reports in the GCSR.
The report indicates that digital disruption – and the exponential technologies that drive it – are increasingly becoming key factors that companies need to consider as they strive to reduce costs and improve margins.
The GCSR surveyed more than 1 000 executive leaders across major global regions about their cost management strategies, finding that cost reduction is a focus of most companies globally at 86%.
However, Deloitte states that many global business leaders fail to recognise the sizable advantages provided by unleashing digital solutions, potentially losing significant value as a result of relying on outdated and inefficient cost management models.
“Organisations are pursuing cost reduction targets of less than 10% with nearly two-thirds (63%) of organisations failing to meet their goals, owing to not driving cost reduction through strategic means, but rather tactical cost management approaches,” states Deloitte monitor associate director Daryl Elliott.
These tactical cost management approaches include streamlining business processes or reducing external spend – likely inadequate means in meeting ever-shifting dynamics of today’s fast-paced and uncertain business ecosystem.
Elliott says businesses can choose to engage in new technologies and capitalise on more strategic cost management initiatives, or remain hindered by outdated and ineffective models of margin improvement.
“The disruptive impact that digital platforms have on business can be a cost enabler – a huge lever to pull in positioning companies to capitalise on the opportunities, particularly with regards to automation, robotics and cognitive data analytics technology,” he says, adding that these areas are likely the first ones to emerge.
Further, Elliott states that companies that harness cognitive data analytics, automation and robotics can expect impacts that disrupt entire industries and may deliver sustainable cost savings of 30% or higher.
Deloitte suggests embracing cognitive data analytics and automation, owing to its capability to outperform human ability, empowering companies to analyse mountains of data and identify key cost savings opportunities, while increasing efficiency and effectiveness across the enterprise.
“Operating at the forefront of next-generation digital solutions requires the right know-how for proper implementation. Arm your company with specialists in digital analytics, data science and automation, as well as prepare management to adopt the latest strategic practices in determining effective cost reduction,” Elliott explains.
He concludes that by embracing new digital solutions and understanding the value of investing in next-generation cost and margin improvement solutions, business leaders can position their companies to evolve through disruption and capture the opportunities of the future.